Disappointing Performance in the Electronics Industry… Operating Profit Down 29.19% for Samsung and 80.5% for LG Electronics Compared to the Third Quarter
The home appliance industry has revealed a disappointing fourth-quarter performance. While both revenue and operating profit showed growth compared to 2023, which was impacted by the "three highs" (high inflation, high interest rates, and high exchange rates), there was a noticeable decline compared to the previous quarter. On January 8, Samsung Electronics and LG Electronics announced their preliminary results for the fourth quarter of 2024. Samsung Electronics reported consolidated revenue of 75 trillion KRW and operating profit of 6.5 trillion KRW, while LG Electronics posted revenue of 22.78 trillion KRW and operating profit of 1.46 trillion KRW. Both companies reported a sharp decline in operating profit compared to the third quarter. Samsung Electronics saw a 29.19% decrease in operating profit, falling from 9.18 trillion KRW in the previous quarter. Revenue also declined by 5.18% compared to the prior quarter. The main reason for the weak fourth-quarter performance is attributed to the downturn in the DS (Device Solutions) division, which handles Samsung's semiconductor business. Although Samsung did not disclose division-specific results in its preliminary earnings report, industry experts estimate that the operating profit for the DS division in the fourth quarter was in the mid-3 trillion KRW range, down from 3.9 trillion KRW in the previous quarter. LG Electronics reported an 80.5% drop in operating profit for the fourth quarter compared to 7.52 trillion KRW in the third quarter of 2023. However, its revenue grew by about 2%. On a positive note, LG Electronics achieved a record-high annual cumulative revenue of 87.74 trillion KRW in 2024, marking a 6.66% increase compared to 2023. This continues the streak of record-breaking annual revenues since 2021, with a compound annual growth rate (CAGR) exceeding 10%. LG Electronics attributed the decline in operating profit for the fourth quarter to the surge in international shipping rates caused by risks in the Middle East region and the uncertain business environment in the second half of 2024. Industry insiders also believe that intensified competition in key business areas such as TVs and home appliances, along with increased marketing costs and higher new business investment expenses in the Business Solutions (BS) division, were significant contributing factors. An LG Electronics representative stated, "We will focus on strengthening the fundamental competitiveness of our business, including quality and cost, while also striving to secure a healthy profit structure through the optimization of fixed costs." ChatGPT를 사용하여 번역한 기사입니다.
